CCP Fines Edible Oil Tanker Association Rs60m for Cartelization

ISLAMABAD: The Competition Commission of Pakistan (CCP) has imposed a fine of Rs60 million on the All Pakistan Edible Oil Tanker Owners Association for cartelization and collusive practices in the transportation of edible oil and ghee.

According to the CCP, the association was involved in collectively determining transportation freight rates and allocating business among tanker operators through a token and turn-based system, restricting free competition in the market.

The CCP imposed a Rs30 million penalty for collective determination of freight rates and another Rs30 million for allocation of business through token and turn system. The Commission also ordered the immediate discontinuation of both practices.

The CCP said an arrangement was in place under which freight rates were increased by 0.75 per cent when diesel prices rose by Rs1, while rates were reduced by only 0.5 per cent when diesel prices fell by Rs1. Thus, for an identical change in diesel prices, the rate of increase in freight charges was 50 per cent higher than the rate of reduction.

Over a period of six years, transportation rates were collectively revised 89 times, including 52 increases and 37 decreases, the CCP said in a statement.

The commission said tanker owners offering discounted freight rates were threatened with blacklisting, while mills seeking lower transportation charges were allegedly threatened with suspension of edible oil supplies. Tankers were assigned business through a token and turn system rather than through free competition.

The CCP also found that a penalty of Rs500,000 each for the tanker and its owner had been prescribed for violations of specific conditions.

CCP show-cause notice

Despite a show-cause notice, the association issued a new freight-rate circular in August 2026 covering 81 destinations, according to the commission.

The CCP said the association had around 2,362 registered tankers and 1,700 owners, with around 250 to 300 association tankers arriving at ports daily, compared with 50 to 60 tankers operated by the National Logistics Corporation (NLC). The association therefore accounted for approximately 83 per cent of the combined market share of the two major players, the commission said.

The commission said one freight circular fixed rates for transporting ghee from Karachi to 81 destinations outside the city. Freight rates were also prescribed for transporting fats to 53 destinations outside Karachi and for ghee and fats to 18 destinations within the city.

According to the CCP, an agreement existed between the tanker owners association and the Pakistan Vanaspati Manufacturers Association (PVMA) for determining transportation freight rates. Representatives of the tanker association also acknowledged that freight rates were determined under a mutual agreement.

The transportation freight agreement was originally reached in 2011 and updated in 2022, the commission said.

During a search operation, the CCP seized six years of freight-rate circulars, agreements and computer-stored records. The commission said its earlier findings had also established agreements between PVMA and oil tanker associations for determining transportation rates.

In that earlier decision, PVMA was fined Rs50 million for violating Section 4 of the Competition Act in relation to price determination.

The CCP warned that higher transportation costs could further increase the prices of essential commodities such as ghee and edible oil, potentially making them less affordable for consumers.